4.2.1 Study: Own a Piece of the Pie

Corporation

A business owned by stockholders that is a legal entity with the right to buy, sell, and make contracts

stock

A certificate showing a share of ownership in a corporation

Market Capitalization

A companies outstanding shares multiplied by its share price

Public Company

A company that has offered to stock to the public in an initial public offering

private company

A company who is ownership is held entirely in private hands

board of directors

A group of people elected by the stockholders to run the corporation

crash

A major decline in the price is

Stockholder

A person who owns a share of stock in a corporation, also known as a shareholder

Dividends

A share of a company's profit that the company pays to investors

common stock

A stock that represents ownership in a company; also called "ordinary shares"

bubble

A surge in price is beyond the real value of the associated asset

Capital gain

An increase in the value of an investment that gives it a higher worth than the original purchase price

Securities and exchange commission

And agency of the U.S.government that regulates and oversees the stock market in order to protect investors

share

One unit of ownership in a corporation

stock certificates

Pieces of paper representing ownership shares in a corporation

preferred stock

Stock that represents claim of ownership in a company and has a higher claim on assets and earnings then common stock

return

The amount gained or lost by an investment

risk aversion

The amount of reluctance a person has to taking chances

initial public offering

The first sale of a stock to the public; also called an IPO

secondary market

The market in which investors buy and sell shares from each other

primary market

The market in which investors have the first opportunity to buy a newly issued share

outstanding shares

the total number of shares issued